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The oil market is becoming obsessed with the question of when shale will crack – not in the sense of pumping rock full of fluid until it fractures to release petroleum, but as in when will the US shale oil industry's fracking spree finally slow down?The discussion has become more urgent since West Texas Intermediate crude fell below $50 a barrel. Independent companies exploring shale in aggregate act like a precision valve in the oil supply machine, increasing output as prices rise and decreasing it when they fall. Any fall in shale output would not happen until 2018, if then.Analysts have been slashing price forecasts and examining the sensitivity of shale production to lower prices.Occidental Petroleum, the largest Permian operator, says it can increase production by 5-8 per cent with oil prices at $50 a barrel and keep it steady at $40 .As Mr Hall said in his letter to investors, it would be "futile" to try to push oil prices to $60 when shale's marginal cost is sinking into the $40s.
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